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How Uber and Taxify Push Kenyan Drivers to Poverty

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Nairobi, East Africa’s largest city and financial hub, is famous for its nightmare traffic, chaotic public transport system, and badly maintained roads. Getting to work in Nairobi is a daily ordeal.

Nairobi’s middle class have abandoned the chaotic public transport for uber-like transportation. Thousands of Uber and Taxify (now Bolt) drivers have been moving Nairobi residents to their destinations for years. In recent months, drivers have been protesting against poor working conditions and poor pay. However, no one is coming to their aid. The government is not listening, and seems it does not care. During one recent protest at Uhuru Park in central Nairobi, drivers were dispersed, 80 of them arrested, and their cars confiscated.

“Those drivers had to pay 50,000 shillings to get their cars back,” Mike Mwangi says.

One reason drivers took an industrial action was to force negotiations with Uber and   Taxify, Kenya’s two biggest ride-hailing firms because of low pay rate. When Uber and Taxify first launched in Kenya, they paid their drivers generously; some were making as much as 100,000 shillings, a fortune to many. However, in the past one or two years, pay has been cut drastically, and rising of fuel prices have made things worse.

“It is because of our government we are suffering,” says Mwangi, who has been driving for both Uber and Taxify in the last two years. He says his earnings have fallen by a half and after paying for fuel and other expenses. He says he gets around 80 shillings in a trip that his client paid 500 shillings.

For example, one of President Uhuru Kenyatta’s sons has invested in ride-hailing apps. He owns fleet of cars operating under Uber and Taxify. Uber loans these cars to drivers at around 1.2m shillings while they may have been purchased at around half a million shillings. Businessman Chris Kirubi, former Nairobi government among others political and business leaders also have unspecified number of cars in the ride-hailing business.

While politicians and other businesspeople continue to make money out of these apps, drivers remain trapped in loans. They cannot stop driving even if they want to because they have to repay their loans.

Rates per kilometres have dropped from 65 shillings to 37 and now stand at 27. Mwangi says the government does not want to regulate the ride-hailing companies and force a higher minimum wage. He says some government officials invested in these companies, and others have their cars driven in these platforms.

Drivers are bearing the brunt of price cuts. Mwangi says he is stuck in traffic for more than two hours, wasting fuel and time, and he does not get extra money for that.

“We cannot afford to eat at proper restaurants; we eat at kipandes. We take a chapatti and a cup of tea or a few slices of bread. That is what we can afford,” David Onyango, who drives for Taxify, says. Kipandes are informal restaurants mainly operated by women on the roadsides.

“That’s how we survive, but people see us in these cars thinking we are doing fine. These apps benefit the riders.”

The Kenyan drivers lack strong unions to fight for their rights.

Driving for Uber in other parts of the world is not as in Kenya. While Kenyan drivers suffer, their counterparts in the developed world earn decently.

For example, the typical American Uber driver earns $16 (1,000 shillings) an hour ($10 dollars after expenses), higher than the federal minimum wage. In London, Uber drivers earn $14 dollars per hour.

A recent survey also shows Uber drivers reporting higher level of life satisfaction than other workers do.

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Kenyans to start paying more for Zoom calls starting next month

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Starting from next month, paid users of Zoom in Kenya will have to fork out an additional fee for their subscription, as the government is set to impose value-added tax (VAT) on several online services to operate in the country.

In an email sent to paid subscribers yesterday, Zoom announced that starting Aug. 1, the Kenyan government will levy a 16 per cent VAT to be borne by the customer.

“Like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations,” the company said.

“The application of these taxes to business with online activities is a complex and evolving area. Zoom continues to review such developments, as well as the nature and extent of its activities in different jurisdictions, and, based on such regular review, will start charging indirect taxes where applicable,” the message read in part.”

Zoom currently prices its lowest subscription package, which offers unlimited group meetings among other perks at Ksh15,000 (about $150), while the highest-paid package costs Ksh25,000 ($250) per year. With the VAT implementation, Kenyan individuals and companies will now pay at least Ksh2,500 ($25) more for the cheapest package and at least Ksh4,100 ($41) more for the highest-priced package.

Zoom is not the only digital service to recently fall under the microscope of the Kenyan taxman. Last year, Kenya Revenue Authority (KRA) introduced the Finance Act 2020 Digital Service Taxes (DST) on income from services provided through the digital marketplace in Kenya, which is charged at 1.5 per cent of the gross value of a transaction (exclusive of VAT). The regulation requires individuals and firms that supply or expects to supply taxable goods and services worth at least Ksh5 million ($50,000) in a year to register for VAT. However, Kenyans registered for VAT will be exempted from paying the tax.

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Court orders Safaricom to pay 600,000 shillings to a blind man for refusing to hire him

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A blind man has won Ksh6million ($6,000) in compensation after a Kenyan High Court agreed with his claim that Safaricom violated his rights for failing to hire him despite interviewing and inviting him to sign an employment contract.

Mr Macharia accused Safaricom of denying him employment as a customer care executive based on his disability and sued for compensation for discrimination and violation of his rights.

He told Justice James Makau that he responded to an advert by Safaricom in August 2016 for a customer experience executive position, which invited qualified Kenyans irrespective of “race, colour, religion, gender, tribal origin, disability or age”.

Along with other persons living with disabilities (PWDs), Macharia explained that he was shortlisted for the role and went through the oral interview and medical test, except for the SHL computerised aptitude test, which was removed for the PWDs so that they were not unduly disadvantaged by the interview process. He was later invited to sign the contract of employment in July 2017. However, the network operator said the invite was erroneous.

Safaricom, in its defence, denied discrimination claims, as well as the plaintiff’s assertion that his rights were violated. The network operator argued that it allowed Macharia to be interviewed for the role of a customer care executive but lacked the specialised software that would enable visually impaired persons to work. The company also noted that it employed 11 other persons living with disabilities for the same role as their disability did not affect their ability to work.

The judge ruled in the plaintiff’s favour that Safaricom violated Mr Macharia’s rights and failed to treat him with dignity. In his speech, the Judge explained that Safaricom should have informed Mr Macharia earlier that the software was unavailable instead of subjecting him to the interview process and inviting him to sign a contract, only to claim later that letter of invitation was sent to him erroneously.

“I find that the Respondent’s excuse to be an afterthought that was introduced late to the detriment of the Petitioner. The Respondent knew right from the beginning that the Petitioner’s work called for software, yet they took him through all recruitment steps,” Justice Makau ruled.”

He added that Mr Macharia must have suffered great humiliation from fellow candidates, family members and friends.

The court, however, absolved Safaricom of any claim of discrimination, noting that Mr Macharia had not shown that he was mistreated during the interviews.

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Business and Finance

Kenyan’s Diaspora sent home 33b shillings in June

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According to new data from the Central Bank of Kenya (CBK), diaspora remittances remittance inflows remained strong in June 2021, amounting to USD 305.9 million compared to USD 288.5 million in June 2020 and USD 315.8 million in May 2021. The report also showed that the cumulative inflows in the 12 months to June 2021 totalled USD 3,383 million compared to USD 2,809 million in the same period in 2020, a 20.4 per cent increase.

The United States continues to be the largest source of remittances in Kenya, accounting for 58.8 per cent of remittances in June 2021.

Meanwhile, in May, remittance inflows increased to USD 315.8 million, compared to USD 258.2 million in May 2020, representing a 22.3 per cent increase. The cumulative inflows in the 12 months to May 2021 totaled USD 3,365 million compared to USD 2,816 million in the same period in 2020, a 19.5 per cent increase.

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